People Value at Riska Key Indicator for Sound Management

  1. Feria Domínguez, José Manuel
  2. Jiménez-Rodríguez, Enrique
  3. Camacho Rubio, María del Pilar
Revue:
Working Papers (Universidad Pablo de Olavide, de Sevilla. Departamento de Economía Financiera y Contabilidad)

Année de publication: 2014

Número: 3

Type: Article

Résumé

People are the most important asset for companies, but they are also a source of risk. People risk involves both intentional and unintentional people's behavior that could provoke losses for firms. The main goal of this paper is twofold: to identify four different risk categories (Internal Fraud, Employment Practices and Workplace Safety, Clients, Products and Business Practices and Execution, Delivery & Process Management) that are "people-related", and to measure the people risk exposure by applying the concept of People-Value at Risk (People-VaR) as a new key-indicator for sound management in the financial sector. Then, we also calculate the Risk Adjusted Return on Capital (RAROC) to evaluate the bank's risk-adjusted performance, being both measures useful tools for monitoring the shareholder's value creation